VICTORIA, British Columbia--(BUSINESS WIRE)--
Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH / TSX:AUP) (the “Company”)
today sent a letter to shareholders in connection with the Company’s
upcoming Annual General Meeting of Shareholders (“AGM”) to be held on
Wednesday, June 26, 2019. Shareholders of record as of May 9, 2019 must
submit their YELLOW proxy by 10:00 AM Mountain Time on Monday, June 24,
2019.

The Company highlighted the following in its letter to shareholders:

Aurinia’s dramatic progress since re-initiating the development of
voclosporin in 2013 demonstrates the effectiveness and strategic focus
of the Company’s management team and Board of Directors.

The Company is well positioned for continued growth, having quickly
evolved into a well-capitalized, late-stage clinical development
company with multiple indications, and is preparing for the
commercialization of voclosporin in early 2021.

ILJIN, a conglomerate engineering company based in South Korea which
already has a representative on Aurinia’s Board, is seeking to appoint
three additional Directors representing 37.5% board control. This
level of Board representation far exceeds its less than 15% ownership
stake in Aurinia.

ILJIN has offered no alternative strategy for value creation or
actionable insights.

ILJIN’s nominees’ lack of experience in commercialization and the U.S.
pharmaceutical market would impede the Company’s continued progress.

Vote using only the YELLOW proxy to support Aurinia and its continued
growth. Shareholders are encouraged to vote the YELLOW proxy well in
advance of the deadline on June 24, 2019 at 10:00 AM Mountain Time.
Shareholders with questions or requests for voting assistance may be
directed to Laurel Hill Advisory Group at 1-877-452-7184 toll free
(1-416-304-0211 collect), or by email to assistance@laurelhill.com.

You are facing an important decision regarding the future value of your
investment in Aurinia Pharmaceuticals (“Aurinia” or the “Company”).

ILJIN SNT Co., Ltd. (“ILJIN”), a South Korea-based company, is seeking
to place three of its nominees on Aurinia’s Board of Directors (the
“Board”). In addition to failing to provide an alternative strategy for
value creation, the dissident has made a series of misleading claims in
an attempt to gain representation on the Company’s Board far in excess
of its ownership.

We strongly believe that adding ILJIN’s nominees would impede the
significant progress we have made in recent years and disrupt Aurinia’s
strong momentum as we approach critical milestones.

AURINIA HAS MADE STRONG PROGRESS TO DATE AND IS WELL POSITIONED FOR
CONTINUED GROWTH

In the past several years, we have transformed from an early-stage
clinical company with one indication to a late-stage clinical
development company with multiple indications. We remain keenly focused
on unlocking further shareholder value as we prepare for the
commercialization of voclosporin.

Voclosporin is a next-generation immunosuppressant compound that has
been extensively studied in over 2,600 subjects and aims to address the
significant unmet medical needs of patients suffering from lupus
nephritis (“LN”), focal segmental glomerulosclerosis (“FSGS”), and dry
eye syndrome (“DES”).

We continue to take a prudent and disciplined approach to stewarding
voclosporin through the Phase 3 AURORA clinical trial for the treatment
of LN and are targeting a commercial launch date of early 2021.

Additionally, we are advancing voclosporin ophthalmic solution (“VOS”),
a topical formulation, for the treatment of DES, which affects
approximately 16 million people in the United States alone1.
Building upon the recently reported results for VOS, we are actively
preparing to launch Phase 2/3 clinical development by the end of 2019.

Critical for a late-stage clinical development company approaching
commercialization, we have maintained a strong balance sheet, with
approximately $144.3 million USD as of March 31, 2019.

Our progress is creating long-term value for our shareholders.
Underscoring just how misleading ILJIN’s attacks on our performance are,
since Aurinia’s rebrand and public market listing in 2013, our share
price has performed well above the TSX and Nasdaq biotech indices.
Furthermore, Aurinia has delivered strong annualized total shareholder
returns relative to relevant indices and the broader market.

Average Annualized Total Shareholder Returns

One-Year

Three-Year

Five-Year

Aurinia Pharmaceuticals Inc. (AUPH:US)

20.1%

40.9%

21.0%

S&P/TSX Capped Health Care Index (^TTHC)

31.4%

8.6%

5.7%

S&P/TSX Composite Index (^TSX)

0.7%

5.2%

2.0%

NASDAQ Composite Index (^COMPX:US)

2.9%

16.3%

12.8%

Today, we are transitioning through several important milestones, and we
expect our share price to ultimately reflect the value we are creating
for shareholders. Aurinia has strong forward momentum and the right
strategy in place to enhance value for all shareholders.

AURINIA IS COMMITTED TO STRONG GOVERNANCE

We are committed to implementing robust governance practices that best
support long-term value creation for all our shareholders. To this end,
we have consistently pursued thoughtful and responsible compensation
practices that align our management’s interests with those of our
shareholders. Our Compensation Committee consists entirely of
independent Directors – including Dr. Hyuek Joon Lee, ILJIN’s
representative on our Board – and undertakes a deliberate process
involving well-established and experienced outside consultants to
develop compensation packages that incentivize long-term value creation.

Contrary to ILJIN’s misleading claims, the salaries for our named
executive officers (“NEOs”) are generally in the bottom 25th
percentile of our 2019 compensation peer group. Furthermore, total
compensation packages (including bonuses and equity compensation) for
our NEOs are approximately at the 50th percentile of our peer
group.

Our continuous efforts to refresh our Board further reflect our
commitment to strong governance. Five of our eight Directors have joined
the Board since 2016, bringing fresh perspectives and extensive
experience in clinical development, regulatory submissions, and
commercialization, particularly in the United States, where we will be
making a regulatory submission. In addition, six of our eight director
nominees are independent.

Furthermore, we remain committed to continually evaluating governance
and Board composition as our Company evolves and as we continue to
engage our shareholders. We recently separated the CEO and Chairman
roles and are planning to introduce minimum equity ownership
requirements for Directors.

Additionally, as ILJIN is aware, the Board has already committed to
increasing gender diversity as part of its Director recruiting efforts.

ILJIN’s continued focus on Dr. Glickman, who no longer serves as CEO or
a Director of Aurinia, is puzzling. As is common practice, Aurinia asked
Dr. Glickman to serve as a consultant to oversee the transition of his
role and to facilitate a seamless transition for Peter Greenleaf when he
assumed the role as Aurinia’s new CEO this past April. The fact that Dr.
Glickman holds this transitional role in no way impedes the Board’s
ability to act independently.

ILJIN HAS PRESENTED NO PLAN OR ACTIONABLE IDEAS

Despite our repeated attempts at constructive dialogue with ILJIN, it
has disclosed no alternative strategy for value creation. Beyond
advocating governance measures (many of which were already underway at
the Company – efforts that ILJIN was already well aware of given its
Board representation) ILJIN has offered no specific, additive or
constructive insights or ideas.

Instead of engaging us in good faith, ILJIN has decided to wage a costly
and unnecessary proxy contest. That ILJIN would distract the Company at
such a critical time, as we focus on commercialization, is particularly
troubling.

ILJIN’s NOMINEES LACK THE EXPERTISE AND QUALIFICATIONS THE COMPANY
NEEDS AT THIS CRITICAL TIME

While ILJIN concurs with our view that the Company’s shift to
commercialization should be our focus right now, the dissident’s
nominees have little-to-no experience in this area. This contrasts
sharply with our nominees, who have proven track records in the
successful commercialization of drugs.

Importantly, our Board includes biotechnology leaders who have
successfully led and transitioned their companies from therapy concept
to revenue generation. These are exactly the types of directors we need
to advance and successfully commercialize while at the same time
ensuring we remain well-capitalized and focused on delivering
shareholder value.

Peter Greenleaf, our new CEO, is an experienced biotech CEO and Director
who has taken therapies through to commercialization, all the while
creating significant shareholder value. He brings the depth and breadth
of experience we need to take Aurinia to its next stage of development
by continuing to grow and advance our pipeline.

ILJIN nonetheless wishes to replace our highly qualified Director
nominees with its own hand-picked nominees. ILJIN has failed to
articulate how any of its nominees would benefit the Company at this
critical juncture and how they would provide the commercialization
expertise it agrees is needed on the Board.

Furthermore, ILJIN’s public communications around the proxy contest
demonstrate a lack of knowledge regarding how to run successful trials
and commercialize therapies. They question rising expenses, but ignore
the larger size of current trials, the need for additional patient
recruitment in the U.S. for FDA approval, and the investment required in
planning for commercialization for swift launch following potential
approval. It’s troubling that ILJIN’s nominees did not inform ILJIN of
these commercial realities.

ILJIN HAS PRESENTED CONTINUOUSLY CHANGING DEMANDS WHILE REJECTING
AURINIA’S EFFORTS TO NEGOTIATE IN GOOD FAITH; ILJIN’S MOTIVES ARE UNCLEAR

The Board has communicated consistently with and listened carefully to
ILJIN’s questions and feedback since ILJIN’s initial investment in the
Company. We regret that despite continual negotiations to work toward a
mutual agreement, they have resisted and instead turned this into a
public proxy battle. ILJIN’s demands included:

Ever-changing Director Nominees: For example, since first
reaching out to Aurinia on March 12, 2019 to propose potential
Director nominees, ILJIN has amended its proposed slate of Director
nominees on no less than five separate occasions, with the latest
change occurring on June 3, 2019 in ILJIN’s proxy circular of the same
date.

Unwillingness to Settle:Aurinia has repeatedly
attempted to negotiate with ILJIN in good faith. In addition to
numerous conference calls, in early May, mere days after his
appointment as our CEO, Peter Greenleaf spent two days with ILJIN in
South-Korea, with the specific intention of reaching an agreement on
the Board slate.

When looking at ILJIN’s pattern of ever-changing demands, volatile
negotiation tactics and unclear motives, we can only assume that the
activist is seeking to gain control of the Company without a clear plan
and without paying a premium to shareholders.

Despite holding less than 15% of Aurinia’s outstanding shares, and
already having a representative on the Company’s Board in Dr. Hyuek Joon
Lee, the dissident is seeking three new Board seats. This level of
representation is hardly commensurate with ILJIN’s holdings.

PROTECT THE VALUE OF YOUR INVESTMENT – VOTE THE YELLOW
PROXY TODAY.

Aurinia’s success in rapid advancement of key therapies, pipeline
growth, and fundraising demonstrates the quality and effectiveness of
our Board. We have the right Board and management team in place to lead
Aurinia to its next stage of growth as we approach commercialization.

Your vote is extremely important, regardless of how many shares you own.
Protect the value of your investment by voting the YELLOW proxy today.

On behalf of the Special Committee of the Board of Directors of Aurinia
Pharmaceuticals Inc.,

(signed) “Peter Greenleaf”

Peter Greenleaf

Chief Executive Officer

(signed) “George Milne”

George Milne, Ph.D.

Chairman of the Board

About Aurinia

Aurinia Pharmaceuticals is a late clinical-stage biopharmaceutical
company focused on developing and commercializing therapies to treat
targeted patient populations that are impacted by serious diseases with
a high unmet medical need. The Company is currently developing an
investigational drug, for the treatment of Lupus Nephritis, Focal
Segmental Glomerulosclerosis and Dry Eye Syndrome. The Company’s head
office is in Victoria, British Columbia and focuses its development
efforts globally. For further information, see our website at www.auriniapharma.com.

About Voclosporin

Voclosporin, an investigational drug, is a novel and potentially
best-in-class calcineurin inhibitor (“CNI”) with clinical data in over
2,600 patients across indications. Voclosporin is an immunosuppressant,
with a synergistic and dual mechanism of action. By inhibiting
calcineurin, voclosporin blocks IL-2 expression and T-cell mediated
immune responses and stabilizes the podocyte in the kidney. It has been
shown to have a more predictable pharmacokinetic and pharmacodynamic
relationship (potentially requires no therapeutic drug monitoring), an
increase in potency (vs cyclosporin), and an improved metabolic profile
compared to legacy CNIs. Aurinia anticipates that upon regulatory
approval, patent protection for voclosporin will be extended in the
United States and certain other major markets, including Europe and
Japan, until at least October 2027 under the Hatch-Waxman Act and
comparable laws in other countries and until April 2028 with anticipated
pediatric extension. Further, the new Notice of Allowanceis
expected to result in the issuance of a U.S. patent with a term
extending to December 2037. If the FDA approves the use of voclosporin
for LN and the label for such use follows the dosing protocol under the
Notice of Allowance, the issuance of this patent will expand the scope
of intellectual property protection for voclosporin to December 2037.

About VOS

Voclosporin ophthalmic solution (“VOS”) is an aqueous, preservative free
nanomicellar solution intended for use in the treatment of DES. A Phase
2a study was recently completed with results released in January of
2019. Previously, a Phase 1 study with healthy volunteers and patients
with DES was also completed as were studies in rabbit and dog models.
VOS has IP protection until 2031.

Forward-Looking Statements

Certain statements made in this press release may constitute
forward-looking information within the meaning of applicable Canadian
securities law and forward-looking statements within the meaning of
applicable United States securities law. These forward-looking
statements or information include but are not limited to statements or
information with respect to: Aurinia’s anticipation that upon regulatory
approval, patent protection for voclosporin will be extended in the
United States and certain other major markets, including Europe and
Japan, until at least October 2027 under the Hatch-Waxman Act and
comparable laws in other countries and until April 2028 with anticipated
pediatric extension; that the new Notice of Allowanceis expected
to result in the issuance of a U.S. patent with a term extending to
December 2037; that if the FDA approves the use of voclosporin for LN
and the label for such use follows the dosing protocol under the Notice
of Allowance, the issuance of this patent will expand the scope of
intellectual property protection for voclosporin to December
2037,Aurinia being well positioned for continued growth, Aurinia
preparing for the commercialization of voclosporin in early 2021, the
belief that adding ILJIN’s nominees would impede the significant
progress Aurinia has made in recent years and disrupt Aurinia’s strong
momentum as it approaches critical milestones, Aurinia preparing to
launch Phase 2/3 clinical development for VOS by the end of 2019, that
Aurinia’s progress is creating long-term value for its shareholders, and
the belief that Aurinia has strong business momentum and the right
strategy in place to enhance value for all shareholders.

It is possible that such results or conclusions may change based on
further analyses of these data. Words such as “anticipate”, “will”,
“believe”, “estimate”, “expect”, “intend”, “target”, “plan”, “goals”,
“objectives”, “may” and other similar words and expressions, identify
forward-looking statements. We have made numerous assumptions about the
forward-looking statements and information contained herein, including
among other things, assumptions about: Aurinia being able to extend and
protect its patents on terms acceptable to Aurinia, Aurinia successfully
completing its clinical trials, Aurinia receiving regulatory approval on
terms acceptable to Aurinia, and Aurinia having sufficient funds on hand
to complete its trials and operations as currently planned.

Even though the management of Aurinia believes that the assumptions
made, and the expectations represented by such statements or information
are reasonable, there can be no assurance that the forward-looking
information will prove to be accurate.

Forward-looking information by their nature are based on assumptions and
involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of Aurinia to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking information.
Should one or more of these risks and uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described in forward-looking statements or
information. Such risks, uncertainties and other factors include, among
others, the following: Aurinia not being able to extend or fully protect
its patent portfolio for voclosporin, Aurinia not obtaining necessary
regulatory approval, negative results from clinical trials, and cash
outlays being higher than currently planned.

Although we have attempted to identify factors that would cause actual
actions, events or results to differ materially from those described in
forward-looking statements and information, there may be other factors
that cause actual results, performances, achievements or events to not
be as anticipated, estimated or intended. Also, many of the factors are
beyond our control. There can be no assurance that forward-looking
statements or information will prove to be accurate, as actual results
and future events could differ materially from those anticipated in such
statements. Accordingly, you should not place undue reliance on
forward-looking statements or information.

Except as required by law, Aurinia will not update forward-looking
information. All forward-looking information contained in this press
release is qualified by this cautionary statement. Additional
information related to Aurinia, including a detailed list of the risks
and uncertainties affecting Aurinia and its business can be found in
Aurinia’s most recent Annual Information Form available by accessing the
Canadian Securities Administrators’ System for Electronic Document
Analysis and Retrieval (SEDAR) website at www.sedar.com
or the U.S. Securities and Exchange Commission’s Electronic Document
Gathering and Retrieval System (EDGAR) website at www.sec.gov/edgar.